The Australian Energy Market Commission (AEMC) has made a final rule requiring newly connecting retail gas customers to pay the upfront cost of their connection, moving away from the old system where these costs were often shared across all customers.
The final determination responds to a rule change request from Energy Consumers Australia and addresses challenges created by declining gas demand projected by the Australian Energy Market Operator.
The rule aligns with the AEMC’s strategic narrative, which focuses on how the gas regulatory framework can best support consumers and the electricity system during the transition to net-zero emissions.
Under the old framework, when a new customer connected to the gas network, the connection costs were typically added to the gas distributors’ capital base and recovered from consumers over time.
However, as the outlook for residential and commercial gas use becomes increasingly uncertain, the costs of operating and maintaining the network may be spread across lower demand, meaning remaining customers increasingly bear the cost of connections that may not be fully paid off.
AEMC Chair Anna Collyer said the changes will protect lower-income households, renters and apartment dwellers and small and medium businesses - who often face barriers to electrification - from bearing the costs of new connections as other users decide to leave the network.
“The existing approach was designed for growing networks, but it’s no longer fit for purpose in a context where the outlook for gas demand is uncertain and is projected to decline, Ms Collyer said.
"Our final rule ensures those who benefit from new connections pay for them, while protecting existing customers from increased network costs. We're pleased this beneficiary-pays approach achieved broad stakeholder support
The final rule is supported by AEMO’s Gas Statement of Opportunities and distributors’ demand forecasts, which projects distribution-connected residential and commercial demand will fall. AEMO projects this will be by around 30 per cent in the next 10 years and 70 per cent over 20 years.
“This is about giving customers clear, upfront price signals so they can make informed decisions about their energy choices,” Ms Collyer said.
“Customers will still be able to connect to gas if they choose to, they'll just pay the true cost of connecting upfront rather than having those costs spread across all gas users. This approach was supported by stakeholders because it protects consumers who may find it difficult to leave the gas network.”
The rule will apply to new retail customers connecting to the main gas distribution networks in the Australian Capital Territory, New South Wales, South Australia and some Queensland gas distribution networks from 1 October 2026.
This implementation timeline reflects distributor feedback and will allow them adequate time to update their systems. It maintains existing consumer protections, including standardised pricing for basic connections and regulatory oversight by the Australian Energy Regulator.
The changes aim to:
- prevent new gas connection costs from being added to gas distributors’ capital bases, protecting existing customers from rising network costs
- provide clearer price signals to help customers make informed decisions about their energy choices
support a more equitable allocation of costs and risks in the energy transition.
The rule change received broad support from stakeholders during consultation, with all submissions to the final determination supporting or accepting the AEMC's approach.
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Media: Jessica Rich, 0459 918 964, media@aemc.gov.au